Edel Metals Group Limited v Geier Limited [2017] NZHC 1833 (4 August 2017)

Last Updated: 15 August 2017

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-201 [2017] NZHC 1833

IN THE MATTER	of Part 18 of the High Court Rules and the companies Act 1993
BETWEEN	EDEL METALS GROUP LIMITED Plaintiff
AND	GEIER LIMITED First Defendant MICHAEL JOHN JACOMB, TRENA KATHLEEN JACOMB AND PETER REGINALD RICHARDSON as trustees of the Genset Trust Second Defendants

Hearing:	On the Papers
Counsel:	D McLellan QC for Plaintiff N W Ingram QC and E F Foote for First and Second Defendants
Judgment:	4 August 2017

_{COSTS JUDGMENT OF FOGARTY J}

This judgment was delivered by Justice Fogarty on

4 August 2017 at 10.00 p.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

Lowndes Jordan, Auckland

Kendall Sturm & Foote, Auckland

EDEL METALS GROUP LIMITED v GEIER LIMITED [2017] NZHC 1833 [3 August 2017]

Background to this Matter

[1] On 22 February 2017, I resolved an application by the defendants to strike out the statement of claim of the plaintiff, Edel Metals Group Ltd (EMG). I also resolved an application for orders and costs, including increased or indemnity costs against EMG and against Mr JA Sorenson, the plaintiff’s sole director.¹ The application for strike out was not opposed. The claim was struck out. Indemnity costs were ordered.

[2] The central costs issues in that judgment were whether Mr Sorenson should be liable for costs on any basis and whether both Mr Sorenson and EMG should be liable for increased or indemnity costs.

[3] The judgment concluded as follows:

[45] In exercise of the discretion given to this Court in Rule 14.6(1)(b), I order that Mr Sorenson and EMG pay the actual costs and disbursements, being reasonably incurred by the defendants. The question of interest is reserved.

[46] The defendants are entitled to costs on these proceedings. These costs are reserved. I will receive submissions limited to 10 pages each, exchanged in advance.

[4] The correct interpretation of paragraph [45] is that Mr Sorenson and EMG were obliged to pay the actual costs and disbursements which had been evidenced to the Court, as being reasonably incurred by the defendants. That is, the costs and disbursements that had been before me at the hearing leading to that judgment. The question of interest on that sum was reserved.

[5] The correct interpretation of paragraph [46] is that the words “costs on these proceedings” are intended to be confined to the costs incurred in preparing for and

_{arguing the application for indemnity costs.}

¹ Edel Metals Group Ltd v Geier Ltd [2017] NZHC 225.

The Present Issues

[6] The Court has now received two memoranda. In the case of the second defendants a memorandum of 7 pages followed by 19 pages of annexures! The second defendants, the beneficiaries of the orders I awarded in the judgment of 22

February, now advise that at the time of the hearing of 2 February 2017 not all the fee notes and invoices for services to the second defendants were before the Court.

Costs up to and including the hearing

[7] At the time of the hearing on 2 February there were invoices totalling

$952,935.29. That was the sum awarded by virtue of paragraph [45] of the February judgment. Counsel now claim further accounts and disbursements incurred in relation to the attendances immediately up to and including the hearing of 2

February, which were not before the Court at the time. These amounted to

$24,960.75 and appear in Annexure IV of the aforesaid submissions.

[8] The costs of $24,960.75 are the subject of paragraph [46]. They were reserved. There is no current order that they are recoverable as indemnity costs. They were the costs on which I sought submissions.

[9] There is an issue to be adjudicated as to whether these should be fully recovered as indemnity costs or whether the costs on these proceedings should be according to scale. It is inherent in the respondents’ memorandum that these costs should be awarded on an indemnity basis, but neither party has provided argument on that approach. It is not clear that costs on a successful application for indemnity costs should be awarded as of right on an indemnity basis.

Post-hearing costs

[10] There is a further category of costs adding up to the sum of $39,578.40 incurred for services provided in the period following the hearing on 2 February down to the submission of the memoranda. I do not fully understand Annexure V of the submissions filed. The Court is told that:

These further services relate to considering the judgment in preparation and settling of the present submissions including detailed annexures. Annexure V hereby provides the make up of those costs and disbursements.

[11] I have read Annexure V twice and am still left unsure as to what these costs were about.

[12] If the costs after the hearing (incurred in preparation of the memorandum on costs) are going to be pursued they will have to be the subject of a hearing. It is simply not possible to understand the submissions on the materials before the Court.

Costs on a judgment of Faire J dated 2 July 2015

[13] The context is that the second defendants had applied for an order for security for costs and consequential orders. Although it is not explicit it is clear from the judgment of Faire J that this was an application against the plaintiff.² The Judge ordered that the plaintiff pay the Registrar of the Court $20,000 by 17 July and

$25,000 by 3 November 2015, or alternatively to give security for those sums. The Judge also ordered that the plaintiff pay the costs in relation to this application and the hearing based on a category 3B together with disbursements to be fixed by the Registrar.

[14] The application for security for costs was adjourned sine die so it could be brought on at a time approximately close to the pleadings date for the purpose of determining whether security should be awarded to cover preparation and attendance at trial.

[15] In the memorandum, filed by the second defendants on 15 May 2017, it was submitted that the order of this Court by myself that the plaintiff and Mr Sorenson pay the actual costs and disbursements being reasonably incurred by the second defendants, raised the question of “the effect of the order for costs in respect of the application for the provision of security for costs by the plaintiff in the hearing of that application”. That application was met with the response that the decision of Faire J could not be reconsidered by this Court. That the order was final in relation

_{to the costs of application for security for costs.}

² Edel Metals Group Ltd v Geier Ltd [2015] NZHC 1509.

[16] That is correct. Paragraph [26](c) of Faire J’s judgment provides:

Accordingly, I make the following orders:

...

(c) The plaintiffs shall pay the costs in relation to this application and the hearing based on category 3 band 3 together with disbursements as fixed by the Registrar.

[17] That is a final order. There is no basis upon which it can be re-opened.

[18] The argument appears to be that Mr Sorenson is not subject to that judgment and therefore Mr Sorenson should be liable to pay the second defendants the actual costs and disbursements on that aplication.

[19] The judgment of Faire J on 2 July 2015 was a result of an application made by the second defendants for security for costs against the plaintiff. There was an opportunity at that time to join Mr Sorenson as the subject of the order for security. That was not taken.

[20] There is no jurisdiction of this Court to re-open the judgment of Faire J of 2

July 2015.

Result

[21] The costs quantified in terms of paragraph [45] of the judgment amount to the sum of $952,935.29.

[22] Insufficient argument has been made on the $24,960.75 claimed as costs leading up to and including the hearing on 2 February. There is no presumption of recovery of indemnity costs in paragraph [46] of the 22 February judgment. Leave is reserved for the parties to apply to recover those costs, or otherwise.

[23] This Court is unable to rule upon the $39,578.40 of costs claimed to be incurred following the hearing on 2 February. Leave to apply to recover them, or some part thereof, is granted.

[24] These issues, if pursued, are to be set down for a case management conference before another Judge.

[25] There is no jurisdiction to re-open the issues and potential issues resolved by

Faire J’s judgment of 2 July 2015.

[26] It is not necessary to seek this Court’s permission to take any of these issues

to the Law Society. This judgment expresses no view on the merits of that approach.

[27] The rulings in these proceedings favour the plaintiff and Mr Sorenson. They are entitled to costs on a 2B basis against the defendants for attendances on the issues addressed by this judgment.